Booksellers Need to Find a New Story

In an attempt to bolster results amid these issues, Borders will close roughly 300 of its Waldenbooks stores, possibly sell much of its international business and build its own online presence.

Borders currently is partnered with Amazon. The new online business is expected to be close to break even in the first year and profitable by the second. Borders plans on launching it early next year.

The company hopes to increase earnings before interest and taxes margin to the 5% to 6% range by 2009 from the current 1.8%. Along with the new online venture, management expects to achieve this by focusing on the Borders Superstores.

Part of that effort will entail changing the corporate culture so that executives' compensation is tied more to their group's performance rather than that of the overall company. On Borders' earnings conference call, CEO George Jones discussed the need to do more basic "blocking and tackling" when it comes to merchandising and retailing and less remodeling of stores.

Borders is known for carrying more titles than most book retailers. The company hopes to turn inventory over more quickly by moving some of those slow-moving titles off the shelves, but still making them readily available through in-store technology, where customers will be able to order the books.

Whether these initiatives will work remains to be seen, but it appears at least that Borders is taking steps in the right direction. Barnes & Noble, on the other hand, seems to be doing very little to stop the bleeding.